ISLAMABAD: Pakistan’s business sentiment has slipped into decline in the first quarter of 2026, a Gallup survey showed on Thursday, as rising energy costs and heightened Middle East tensions dampened expectations for demand and investment.
Pakistan’s power sector relies heavily on imported fuels, leaving it especially vulnerable to global energy shocks. Disruptions in oil and gas markets following the Middle East conflict between US-Israel-Iran have pushed up fuel costs, raising the risk of inflation and higher electricity tariffs.
The 17th quarterly survey conducted in April by Gallup Pakistan showed declines in current performance, future expectations and perceptions of the country’s direction, based on responses from 510 companies nationwide.
“The simultaneous decline across all major indicators signals a clear shift toward pessimism within the business community, with external cost pressures playing a central role in shaping sentiment,” Bilal I. Gilani, Executive Director at Gallup Pakistan, was quoted as saying.
The report said business sentiment had entered “negative territory,” with inflation cited as the top concern by 37 percent of firms followed by worries about rising fuel and petrol prices.
Gallup Pakistan highlighted that 58 percent of firms reported an increase in energy costs, while 76 percent expected conditions to deteriorate further if regional tensions persist through July.
It added that 57 percent of respondents expected conditions to worsen, while 44 percent were optimistic about future performance.
“Perceptions regarding the country’s overall direction also deteriorated significantly, with the score dropping to -32 percent from -8 percent in the previous quarter,” it added.
Gallup Pakistan said the net future confidence score declined by 25 percent, citing uncertainty and weakening business momentum compared with the last quarter of 2025.
“While some sectors continue to show resilience, the overall trajectory suggests stagnation risks in the near term,” it said.
The Strait of Hormuz is a key transit route for nearly a fifth of global oil shipments, and disruption risks tend to push up crude prices. Higher oil prices increase Pakistan’s fuel and power generation costs. These costs then pass through the economy, raising production expenses for businesses.
